Mortgage rejections soar

Updated 14.52 Mon Oct 15 2007

Keywords: mortgage

Those wanting to borrow to buy a house are being warned to prepare for rejection - with 60 per cent of mortgage applicants turned down over the past six months.

New figures show a total of 738,000 home loan applications were rejected by lenders during the six months to the end of September.

"The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection" - Sean Gardner

This compared with only around 463,000 in the previous six months, according to financial website MoneyExpert.com.

Those aged between 25 and 34 accounted for half of all people who were turned down.

The group said consumers were being hit by a combination of higher interest rates and tighter lending criteria among mortgage companies.

It said with interest rates rising five times since August last year, someone with a £150,000 mortgage will have seen their annual repayments rise by around £1,320, stretching affordability.

Sean Gardner, chief executive of MoneyExpert.com, said: "Life is tough at the moment if you're applying for a mortgage.

"The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection."

The group said given the number of applicants being turned down, it was unlikely only first-time buyers were being affected.

It said anyone looking to remortgage should take professional advice if they were unsure, as too many failed mortgage applications could affect their credit rating.